Where do I start?

Starting a travel business can be exciting but it can also be daunting when you start looking at the regulatory requirements and the potential risks involved. You may need to put in place financial protection both for your customers and for your business.

It can all leave you a bit perplexed.

Our friendly team has over 87 years of combined experience in the travel industry and has supported hundreds of travel businesses, large and small. We are here to guide you through the process and let you know what you need.

Protecting your customers

Firstly, what are you intending to sell?

There are different requirements for different types of trips and the key difference is whether you are selling a package or not.

So, what is a package?

This has been a contentious question over the years but in simple terms, a package is when you sell a combination of two or more types of travel services for the purpose of the same trip. The applicable travel services are; accommodation, travel, car hire and another tourist service, which is not part of another component but is a significant part of the package such as guided tours, tickets to a sports event or ski passes.

The full definition of a package is set out in The Package Travel and Linked Travel Arrangements Regulations 2018 but you might need a lie down after reading them so we would recommend the Government’s more digestible Package Travel Guidance.

If you are organising a package, you must provide your customer with financial protection, which will refund or repatriate them in the event of your insolvency. How you comply with this requirement will depend on whether you include a flight in the package.

Flight-inclusive packages

If you sell a flight-inclusive package, you must cover this under an Air Travel Organiser’s Licence (ATOL), either by applying for a licence directly from the CAA or through an Accredited Body or ATOL Franchise. More information on these options can be found on the ATOL website.

If the CAA offers you an ATOL, they are likely to require a bond – this is a financial guarantee provided by a bank or insurance company, which promises to pay out a specific amount of money if you cease trading.

And that’s where we come in! We work with a number of approved insurers to arrange ATOL bonds and using our extensive experience, we aim to secure the best possible terms for your business.

Non-flight packages

If you sell a package that does not include a flight, you have a little more flexibility as you can choose to protect your customers through three different options:

• Financial Failure Insurance (FFI);
• Bonding held as part of membership of an Approved Body such as ABTA; or
• Holding funds in an independent trust account.

We arrange both bonds and Financial Failure Insurance, which are approved by ABTA and meet the requirements of the Package Travel Regulations. The costs and benefits of bonding and FFI differ according to the terms available and your business needs. We can discuss this with you and explore both options to provide you with a comparison on the best way forward.

Single components such as Accommodation Only

There is no legal requirement to protect sales of single components but many travel businesses are choosing to do so, so that they can offer their customers peace of mind and provide a clear message that all bookings with them are financially protected.

You can choose to protect single components through our Financial Failure Insurance policies or if you intend to become an ABTA member, we can obtain quotations on both FFI and bonding to give you a cost comparison on meeting the conditions of your membership.

Protecting your business

Selling holidays carries significant risks due to the responsibilities placed on you as the organiser. You are responsible for your customers whilst on their trip and for the performance of your suppliers. As such, many travel businesses choose to insure against these risks with the policies below, to protect themselves financially.

Public liability and professional indemnity

If your customer is injured whilst on their holiday or suffers damage to their property, and you or your suppliers are found to be at fault, you could be held liable for damages. Without appropriate insurance, these claims can cause significant damage to your company, not only financially but also reputationally if you are unable to compensate the customer.

On top of that, if a customer’s trip isn’t what they expected and they pursue a claim for breach of contract, misrepresentation or mis-booking, it can also lead to a substantial claim against you causing financial loss.

We therefore offer a combined tour operators liabilities insurance policy, which is designed specifically to cover both of these risks, giving you peace of mind.

This policy is strongly recommended for all tour operators and is often a condition of membership for travel trade associations and regulators.

We can also extend cover to include:

• Directors & officers
  When managing a business, you may take decisions and actions that put you at risk so we offer cover that financially protects anyone in your business involved in management or critical decision making.
• Cyber insurance
  No matter what size business you have, the threat of a cyber-attack is increasing and with greater reliance on technology, the impact on your business could be significant. To protect your business, we offer cyber insurance to cover losses from damage to your IT systems or loss of information as a result of cybercrime.
• Employers’ liability
  If you are an employer, you are legally required to have employers liability insurance or you could face significant fines. This insurance provides cover for any claims arising due to your employees being injured during the course of their employment and you can reduce the hassle of arranging separate cover by including it with your Combined Tour Operators Liability policy.

Supplier failure insurance

If you organise packages, you are responsible for the performance of all components of the trip. Consequently, if any of your suppliers cease trading, you would be financially liable for them and would need to make alternative arrangements for your customer or refund them. It is important to choose your suppliers carefully but for complete peace of mind, we offer financial failure cover for your end suppliers including airlines, hotels or transport providers.